Is Santee Cooper an Asset?

Energy Consumers of the Carolinas’
October 13, 2020

From Scott Carlberg

An asset should have a positive benefit to the owner. Not always the case, obviously. The unhappy example is Santee Cooper – it bet the future of the company and the finances of its stakeholders and failed. Deeply failed. Santee Cooper failed itself and the people who own it and use it.

Human nature can have an odd way of looking at such failures, though. Check this discussion about risk from the Harvard Business Review which is a long quote, but worth it:

We tend to be overconfident about the accuracy of our forecasts and risk assessments and far too narrow in our assessment of the range of outcomes that may occur. We also anchor our estimates to readily available evidence despite the known danger of making linear extrapolations from recent history to a highly uncertain and variable future. We often compound this problem with a confirmation bias, which drives us to favor information that supports our positions (typically successes) and suppress information that contradicts them (typically failures). When events depart from our expectations, we tend to escalate commitment, irrationally directing even more resources to our failed course of action – throwing good money after bad.

Santee Cooper hits the punch list:

  • Santee Cooper is incapable of realistically assessing and addressing risk. Blind to it.
  • Santee Cooper overestimates its ability to change and has convinced its apologists.
  • “Confirmation bias” clouds the possibilities of a hobbled entity.

In response Santee Cooper and South Carolina are “directing even more resources to our failed course of action – throwing good money after bad.” Every day that goes on with massive debt is money gone.

In this case, billions of dollars of customer money.

Santee Cooper has been described by some as an asset of the State of South Carolina.

Is it? How best to realize the value of Santee Cooper as an asset?

Recently the South Carolina Small Business Chamber and the Gullah Geechee Chamber dissected that question in a document named, No Longer an Asset (right). Those groups pulled together the litany of Santee Cooper behaviors that have tarnished the utility. Pretty amazing list of issues, too.

The report starkly shows how irredeemable Santee Cooper has become. The document is worth a read. In addition to that report, ECC suggests keeping in mind a basic business concept.

“An asset is anything of value or a resource of value that can be converted into cash. Individuals, companies, and governments own assets.” (Source)

An asset is something positive netted against liabilities. What is the balance – benefits versus liabilities?

Do the negatives outweigh the positives of continued state ownership of Santee Cooper? Yes.

Add to that Santee Cooper’s risk to the state – open-ended surprises, opaque culture, lack common sense. Recurring surprises throw wrenches into any prospect of planning a reasonable future as its stands now.  A culture of ill-advised decisions and insular thinking. That is no way to tend an asset.

Look at it like this: If a non-South Carolina company wanted to come into the state and had the same record as Santee Cooper, the state would say that it does not measure up. No thanks. Don’t need those kinds of problems.

Seems odd that high-quality is turned down in favor of inferiority. Risk is preferred to more certainty. Lack of openness is preferred to no secrets and no surprises.

South Carolina juggles a litany of concerns: A challenging economy, COVID, education, public welfare, economic development… Should the state maintain another challenge on the plate of South Carolina legislators?

The State of South Carolina can save valuable time and prevent risk by selling Santee Cooper. A company with real energy resources and skills can turn Santee Cooper into an example of a clean, efficient, open, well-resourced organization.

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